Crying Wolf

Even amidst planned expansions to Denver, Las Vegas, Phoenix and Washington, DC, financial troubles for arts corporation Meow Wolf were more dire than the company let on, even before public health orders shut down the Santa Fe attraction.

Meow Wolf leaders held a meeting last month with employees three days after they announced the layoffs of 201 of their colleagues. In audio from the April 13 Zoom meeting obtained by SFR, Meow Wolf's trio of CEOs—Carl Christensen, Ali Rubinstein and Jim Ward—told remaining workers the company had already needed new investors to stay viable beyond June, and were even grappling with the idea of contracting much of its work to outside companies in the months leading up to the temporary closure of its flagship House of Eternal Return installation in mid-March.

"We knew we were going to hit our financial wall in June," Ward said in the meeting. "We were out trying to raise money in a very, very dry desert, and then, on top of that, COVID-19 hit us."

Christensen presented a series of slides and talked about the financial picture.

"Let me [be] pretty transparent about a need for capital…back in Q3 of last year. That need and understanding of that need grew through Q4 of last year," he said. "It really became much more clear as we refined project budgets, and a lot of you did tremendous support in understanding timelines and understanding the real need, capital need, for what we would face over the next two to three years as we build towards Vegas and Denver. As you all remember, we've had conversations about hitting this wall, and what that would look like prior to COVID-19 happening."

According to Christensen's comments, at least one "term sheet,"—specific plans with investors—was stalled by COVID-19. But when those expansions pick up, Rubinstein said, outside contracting is likely.

"Something that we have come to realize in the recent past, really in order to sustain our growth of what's been envisioned for this company, we do need to look at what's core to our company, and…lean on outside expertise to support our projects," she said. "There will be work contracted out, and there will be work that stays within Meow Wolf."

Rubinstein didn't specify what ratio of company versus contract work would be put into place, but her comments suggest some positions were already in danger of being eliminated. Both she and Ward said during the meeting that the expansion to other cities announced across the country were too much, too soon.

"We want to be open and honest with you, and we want you to understand the facts of the challenges that we were all facing," Ward said. "The headlines were these: The company grew too big, too fast, without a clear view about what is truly core to us, what core contributions we must make to our projects and how we should organize our projects."

Later in the meeting, Rubinstein reiterated that point, saying, "in retrospect, as Jim mentioned, as a company, we grew too fast."

Christensen said Meow Wolf received $6.6 million from the federal Payroll Protection Program, but that it "doesn't entirely offset the $50 million impact we feel from COVID-19." Still, he specified the company has already started using the funds to retain some jobs and cushion severance packages for the hundreds of employees who were laid off. Higher-ups have reportedly taken a pay cut, though Meow Wolf has not announced those percentages.

Meanwhile, PPP loan forgiveness hinges on maintaining or even rehiring employees, and several former workers told SFR their jobs were not offered back to them. None would go on the record, however, as a non-disclosure agreement (including a non-disparagement clause) was a mandatory provision for receiving severance pay. Artist Dylan Pommer, who designed elements within the House of Eternal Return, said he was able to negotiate the removal of a noncompete clause that would have prohibited former Meow Wolf employees from working together for up to two years. Those former workers and artists are still prohibited from working with current employees.

Overall, former employees tell SFR they continue to be upset by the company's lack of communication in the events leading up to the layoffs. Regardless, for those who felt financially forced to sign NDAs, it is likely this is the end of the road, although in the April 13 Zoom meeting, Ward mentions laid off employees could potentially reapply once the pandemic subsides.

In response to questions posed to the company, the OCEO issued a statement via email reading, in part, "the COVID-19 crisis has forced us to face our financial challenges by creating a roadmap to sustain our current operations while building toward the future. Our actions this past month in terms of the depth of our restructuring were, unfortunately, entirely related to the necessity of withstanding the financial impact due to COVID-19," they wrote. "We had already brought in outside resources to focus on functional areas where we were not the experts including project management and execution," she wrote. "COVID-19, unfortunately, required us to completely reevaluate this strategic pivot and prepare an entirely new approach for a more streamlined organization which led us to engage in the restructuring as necessary to ensure the survival of the company."

As for the future of mass gatherings like installation attendance—and concerts, which play a pivotal role in Meow Wolf's revenue and offerings—with Gov. Michelle Lujan Grisham announcing this week that such events will continue to be restricted, Meow Wolf's future as a venue remains uncertain.

The timeline for projects in other cities is also unclear. Most began with planned opening dates this year but they appear to have become moving targets.

Meow Wolf's ride at the Elitch Garden's Amusement park opened last spring in Denver and its building for an immersive installation there is under construction near the stadium where the Denver Broncos play. Local news there said it would be done in 2021.

The 53,000-square-foot project in Las Vegas called Area 15 previously had a projected opening date in 2019. A video posted in February said it would be "Fall 2020. As for Washington, DC, for which Meow Wolf announced it would expand in December 2018, no new information is available. A proposed hotel and creative space in Phoenix, Arizona's artsy Roosevelt Row neighborhood is presumably still in the works, though it has been nearly two years since Meow Wolf announced that potential expansion.

The full OCEO statement can be read below:

An earlier version of this story incorrectly attributed the statement to a Meow Wolf PR representative.